History Of The Stewardship Theory Accounting Essay

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The stewardship theory holds a different approach from that of the agency theory, it first premise is that, the company serves a large range of social purposes rather than just trying to maximize the wealth of shareholders. The stewardship theory also called the stakeholders theory assumes that corporations are social entities that affect stakeholders welfare and stakeholders are individuals interacting with the firms directly, therefore, they can affect or affected by the achievement of the firm's objectives(Donaldson and preston,1995, freeman,1984)

According to Starik and Rands(1995), a company's success can be judge by its ability to add stakeholders value(starik and rands,1995,Dunphy et al,2003).stakeholders will only return to a firm for more when they always get what they wantFreeman,1984, freeman and Mc Vea,2001).Hence stakeholders are regarded as instrumental to corporate success and they tend to possess some moral and legal rights(Donaldson and Preston,1995, Ulrich,2008).Companies management have to take in to consideration the claims or concern of stakeholders in their decision making process(Blair, 1995), stakeholders participation in the company's decision making process enhance better efficiency (Turnbull,1994) and also reduces conflicts(Rothman and friedman, 2001).

A company can use two approaches when considering or integration stakeholders in their decision making (kaptein and van Tulder,2003). These two approaches are reactive and proactive approach. Reactive approach on one hand is when the concern of stakeholders are not considered or integrated in making corporate decision. This usually leads to misalignment of the company's objectives and the demands of stakeholders (Mackenzie,2007).The scandals of world com was attributed to the fact that they never integrated the stakeholder concern in their decision making processes(Curral and Epstem,2003, Turnbull,2002, walkins,2003 and Zandstra,2002) .In respond to these scandals, some regulations were set up by governments with the aim of aligning stakeholders interest with corporate objectives. For instance, the Sarbanes-Oxley Act. On the other hand, the proactive approach is when companies integrate the concern of stakeholders in their corporate decision making process, thus establishes a good corporate governance structure( de wit et al, 2006).

3.5 Summary of the theories.

The knowledge of agency theory can be credited to Coase (1937) however the ideas of this theory was practical only to directors and boards since the 1980's.Following . agency theory, individuals are self-interested and not altruistic, therefore individuals can never be trusted to always act in others best interest. On the other hand,, individuals will always want to maximize their utilities functions, the agency theory considered managers and shareholders relationship as a contract ( Adams, 2002). This means that managers actions must be properly monitored to guarantee that they always act in shareholders' best interest.

The stewardship theory on its part opted that company's board of directors and their CEO, acting as stewards, are encouraged to act in the company's best interests and not trying to satisfy their selfish interests. This is partly because, previously senior executives regarded companies as an extension of themselves (Clarke, 2004; Wheelen & Hunger, 2002).The stewardship theory therefore suggested that,like shareholders, top management of a company should care more on the future success of the company (Mallin, 2004).

3.6 The impact of Audit committee

The AC is seen to have great impacts in attempt to ensure good corporate governance. These impacts can be seen on audit process and audit fees

3.6.1 The impact of AC on Audit process

It has been acknowledge that AC has a pertinent role to play in verifying and protecting the integrity of the company's financial statement and the company internal control systems (Abbott et al, 2004; klein, 2003; Australian accounting research foundation et al, 2001).Included in this role, the AC has the responsibility of guaranteeing the independence and competence of external auditors(ASX, 2003;Australian accounting research foundation, 2001).According to Sabones-Oxley act, the AC has the responsibility to appoint auditors and they have to oversees the performance of the auditors regarding the firm's external financial reporting(US congress, 2002)

It was argued by smith report (2003) that AC have to review the engagement memo at the start of audit and the AC has to take in to consideration the audit scope and the suitability of the work that is planed.Furthermore, according to smith report,(2003) ,at the end of the audit work, the AC have to evaluate the the audit findings and management opinions regarding the auditors recommendations. As a recommendation, AC has to meet with external auditors at least on a yealy basis in the absence of the management to deliberate on issues arising fro the audit (smith report, 2003, Australian accounting and research foundation et al, 2001).

Some research has been carried out to sample auditors view regarding the impact of AC on audit. Cohen et al,(2002) carried out a structured interview sampling the opinions of auditors. It was revealed that AC has a less significant role to play on audit process compared to senior management or the board. In this interview, the auditors specified that they only met with AC 2 to 3 times a year and in these meetings, the AC plays a passive role rather than acting proactive as the auditors tends to be reporting to the AC. However, deliberations with AC are reported to have significant impact on the audit risk assessment and audit setting(cohen et al, 2002).

Another key area where AC has a pertinent role to play in audit process is to resolve conflicts between the management and the auditors(cohen et al,2002, Turley and Zaman, 2004).As revealed by beattie et al (2000), AC seems to diminish the confrontational strength of interaction between the auditors and management by increasing the level of discussion and reducing the need for negotiation(Beattie et al (2000).On the other hand, some studies like Dezoort et al,2003;Dezoort and salterio, 2001:and knapp,1987) observed influential factors on the AC decisions to support auditors in steads of the management. Such factors include, AC members expertise and experiences, the nature of the conflict, the auditors perseverance and client's financial situation.

3.6.2 The impact of AC on Audit fees

A good number of studies have found out that there is a link between audit fees and the AC.( Goodwin-stewart and kent, 2006; sharma, 2003).This is seen on the AC role of guaranteeing that audit hours are not cut down to a level that will compromise audit quality(Cadbury committee, 1992,;jack, 1993).According to smith report(2003), in situations where the AC is not contented with the audit scope, more work or task has to be requested. Also, the AC have to be satisfied that the audit fee is appropriate and that efficient and effective auditing performance will be achieved for the fees charged. As a consequent, incase the AC fails to carry out their responsibilities properly, they will lose their status or reputation and will face litigation when there is audit failure(Abbott et al, 2003).Therefore, the AC have high incentives to request for good auditing quality.

Chapter 4

4.1 Corporate Governance issues in Developing Countries (Cameroon)

According to Wallace (1990), developing countries are defined as those countries found in mid-stream of development and are referred to anamorphous and heterogeneous group of countries found mostly in Africa ,Asia, Latin America ,Middle East and Oceanea. There exist difference between developed and developing countries in terms of culture, politics and market economics (Waweru and Uliana,2005).Due to lack in skilled human resources, developing countries therefore find it difficult to attract personnel's verse with accounting and financial skills in their committees. The cultural variation between highly individualistic countries ( like North America) and highly collectivistic countries (like Africa) necessitate different corporate governance arrangements. Rabelo and Vasconcelos (2002) pointed out factors like economic trends towards globalization, under developed capital market as well as government intervention has made the model of corporate governance to differ from those in European countries and North America. Mensah (2002) argued that countries in Africa are not well equipped in implementing the kind of corporate governance found in the western world because of the economic and political regimes characterizing these countries(example weak fraudulent legal and judicial regimes ,state ownership of companies as well limited capacity in skilled human resources.).

Corporate governance structures in less develop countries are determined by the zeal to maintain control by the majority shareholders over firms ,the dependent on debt finance, weak financial markets and ineffective legal system (Rabelo and Vasconcelos,2002).Developing countries are always confronted with problems like less developed and illiquid capital markets, economic uncertainties ,investors protection as well as weak legal and judicial control system (Tsamenyi et al,2007).

According to Goddard and Masters(2000),audit committees has become more relevant and prevalent latterly but however there is paucity in the empirical research about their value. Kalbers and fogarty(1993) further indicated that the issue of whether audit committees are really discharging their relevance responsibility remain insufficiently understood, suggesting therefore the need to examine the ways audit committees are operating in developing countries like Cameroon

In Cameroon, most companies are owned by institutions and such institutions are owned by the state(government), therefore most board members are serving the position as management of shareholders not because of their qualification neither their experiences(Mensah,2002).Audit committees operations in developing countries are different compared with the practices in developed countries .In 2001,the Cameroon capital market authority gave guidelines regarding corporate governance activities for listed companies.one of this guideline was that which called all boards to form audit committees comprising at least three independent non-executive directors.

Figure 2, corporate governance(CG) fram work in Cameroon

4.2 The legal and Regulatory Framework of corporate governance for listed companies in Cameroon

Cameroon operates under two systems of laws namely ;the common law and the civil law. The bilingual nature of Cameroon is inherited from Britain and France when the county came under the administration of these two great powers. Therefore Cameroon has a bijural system with the English Common Law effective in the two Anglophone provinces of North West and South West and the French Civil Law effective in the eight francophone provinces namely ; Adamaoua, Centre, East, Far North, Littoral, North, West and South.

The surveillance of the principles of good corporate governance in Cameroon listed companies have been protected by the mixture of voluntary and mandatory mechanisms .The DSX code of best practices for listed companies in Cameroon is voluntary and is aim at enhancing good business practices and standard for all listed companies in Cameroon. On the other hand, mandatory corporate governance requirements linked to companies are enclosed in the Companies and Allied Matters Act 2001).(CAMA).

The following bodies are loaded with the responsibilities of guaranteeing effective management, accountability and control of companies in Cameroon.it is important to deliberate on the respective roles and responsibilities of these institutions .

4.2.1 The Douala Stock Exchange(DSX)

The DSX is the top regulatory organ of stock market in Cameroon. DSX was formed , and organized in agreement with the provisions of degree No.99/015 of the 22nd December, 1999.but it went effective from 2001. The DSX is both a standard bearer of the national economic and the financial community .It is a public limited company with board of directors. DSX has a total capital of 1.8 billions CFA of which 7% is owned by private commercial banks , credit foncier of Cameroon and the Dutch bank FMO, 23% by public interest and 13.3% by private insurance companies. In Cameroon, the number of companies listed in the Stock market is very insignificant. There are only three companies listed in the DSX namely the mineral water company(SEMC), the African society of Agriculture and forest Cameroon(SAFACAM) and the Cameroon Society of palms(SOCAPALM),DSX got as it main objective the promotion of active stock market by creating a conductive investment environment to encourage foreign investors to invest in Cameroon. To ensure appropriate standards of conduct and expertise in security business, one of the main functions of DSX is to ensure total protection of securities, the registering of all security merchants, investment consultants and physical market like the stock exchange trading floors or branches.

In custody of its mandate of spreading good corporate governance, the DSX presented the code of best practices for companies listed in Cameroon. The aim of this code was to make sure that managers and companies' shareholders perform their obligations within the context of accountability and transparency. This code of best practices focuses more on the board of directors, the audit committee and the shareholders.

4.2.2 The Board Of Directors ( BODs)

The code of best practices focuses more on the board responsibilities and their functions. The board have the obligation of directing the activities of the company in a legal and efficient manner as well as ensuring that the company progresses in its value creation process. According to the code, the main functions of the board are strategic preparation, selection, performance assessment and compensation of senior executives. communiqué with shareholders, guaranteeing the truthfulness of financial control and report and also guarantee that ethical business standards are upheld and that the company is in compliance with Cameroon laws .The code endorses the board size of almost 15 members and a least 5 members made up of both executive and non-executives directors.

4.2.3 The Audit Committee (AC)

The DSX code of best practices identify the importance of audit committee due to its strategic position in guaranteeing good corporate governance standards in companies. The recommendations of audit committee are an addition to the provisions of CAMA. The main duties of audit committee can be summaries as listed below;

- To determine if the company accounting and reporting policies are in compliance with the legal requirements and in accordance with ethical business practices

- Reviewing the scope and the preparation of audit requirements

-Ensure the effectiveness of the company's accounting system and internal control

-Make approval to the board concerning the appointment, dismissal and compensation of the company's external auditors

-Approve the internal auditors to conduct investigations on activities which are of prime interest to the committee

-the appraisal of the integrity of the firm's financial statements;

-To counsel the board on the trustworthiness of financial and maybe other information's that has to be published in the name of the board;

-To supervise the financial reporting and disclosure procedures

-The deliberation on the nature and scope of the audit with the external auditors

-To evaluate the management memo from the external auditor;

-To ensure the effectiveness of the internal control operations of the firm

- To evaluate any substantial findings of internal investigations

4.2.4. The Shareholders

The DSX code of best practices for corporate governance in Cameroon made a series of recommendations to ease shareholders contribution at the general meeting. In respect of this, the place for the general meeting has to be such that it is conceivable and affordable in both cost and distance, to permit a mainstream of shareholders to be present in the meeting and to vote, thus avoiding the violation of shareholders right. The code also necessitates that sufficient notice of such meetings should be made available to shareholders and these meeting notices should reach the shareholders a least 21 working days before the meeting day. The notice must contain information's on the annual reports , financial statements and other relevant information to allow them to vote appropriately on these issues. The general meeting is like a venue for the company's board to communicate and boosts shareholders contribution in the company's governance

4.2.5 The Government

The role of Cameroon government is not left out in ensuring good corporate governance practices. The government offers the legal frameworks for firms incorporation, outline the limits of business activities, the government ensures that the company's operations are in compliance with formed standards and that stakeholders obligations are met. The basic principles which are entrenched in the stature regarding the management and control of business corporations in Cameroon include;

-The acknowledgment of company as a legal entity different from its owners.

-Infinite life of a company due to shares transferability

-The designated board supervises the running of the company and is answerable to the all members on their stewardship.

-The directors has the obligations of keeping good records of the financial issues of the company and make proper returns.

There are three main legal form for doing business in Cameroon that is, an individual functioning as a sole owner without formality, a partnership of a least two persons and the creation of a limited liability company recorded under CAMA. The CAMA gives a lot of tasks to the board members to direct the company's activities effectively to guarantee business accountability, transparency and responsible to firms' owners and stakeholder's.

4.3 The Actors of Corporate governance; Managers and shareholders

In Cameroon, there is a cumulative rise of the question of what companies owners will become as they are simply the viewers on the management of their money by managers. To answers this question, we have to look at Managers behaviors, however Managers behaviors varies depending on shareholders influential abilities. Managers behaviors defined the importance of Corporate governance in companies due to the critical position they occupy in the value creation process (Caby and Hirigoyen,2001) and also due to the detachment of ownership and decision making functions. Managers as shareholders agent have as their key objective to manage the business at shareholders best interest(Ross,1973 and Jensen and meckling,1976) but however both the manager and firms owners has varied utility functions and each tries to maximize its utility function(Ross,1973).Agency conflicts or problems can then result from managers opportunistic behaviors .For instances, managers are much motivated in seeking company's growth because their salary depends on it .(Baker ,Jensen and Murphy,19958),Also there is the issue of diversification that managers are always interested on .Managers can have the will to diversify risk but it will contradict shareholders interest (Aminud, and Lev,1981).Managers occupy a pivotal position in a company as they represent shareholders and act as the employees superior authority their arbitrations are difficult(Arcinles,1995).Corporate governance role is then to aligned managers attitudes near shareholders and stakeholder wealth maximization criteria. However , the extend to which corporate governance is importance is determined by the power exerted by shareholders and board of directors operations.

- shareholders having greater shares;

This role of firms owner with larger shares is been justified by schileifer and Vishny,(1986)as a guarantee of managers discipline when there is capital dispersion, to supervise managers activities is then difficult and very costly to a shareholder taking it individually. Therefore to obtain optimal monitoring which is profitable to all shareholders, only shareholders with greater shares are allowed to incurred monitoring expenses .It is in this light that Jensen (1993) mentioned the nation of " Active shareholders"

-Financial monitoring plays a role in situations where a company like joint stock company is been controlled by a group of persons whom because of their share capital contribution or as a result of foreign ownership representative can significantly influence the company's management.

-The importance of family monitoring.(Allouche and Amann,2000) regard family shareholding as source of active shareholding .For instance, in Cameroon ,family shareholding have unequal economic roles and they tend to represent the main proportion of the country economic fabric .Factors such as confidence and family ties can explain their outstanding performance (Bourdieu,2002)

Chapter 5; Research Methodology

5.1 Introduction

Research method deals with the style in which data's are collected, analyze and interpreted to achieve the study objectives. This chapter will treat the design and method used to address the study questions as it was mentioned in chapter 1.This research made used of questionnaires survey and interview survey .

5.2 The questionnaire survey

Questionnaires is the widely used method in social science fields ((Easterby-Smith et al, 2001; 2008). This is a method in which all participants are asked almost the same questions in the same situation (Easterby-Smith et al., 2001; Li et al., 2000;Merriam, 1988; Payne, 1980).

In this study, a questionnaire was developed from a review of related conceptual, theoretical and pre-tested with a sample of auditing practioners. The questionnaires which is made up of 58 questions in total (see appendix 2) directly addresses the study objectives. This questionnaires centers on the audit committee's operations, composition, financial skill, independence, self-evaluation, relationships, major achievements and outstanding challenges facing audit committee .A majority of these questions are Yes or NO question type and in the others, the respondents were expected to rate the committee achievements with a score of 4(to a greater extend ) to a score of 1(not at all).

The researcher circulated the questionnaires to all targeted respondents which included ; audit committee chairpersons, company secretaries and the finance heads of the 3 listed companies in DSX with audit committee in place. This gave a total of 9 questionnaires ( 3 audit committee chairpersons, 3 company Secretaries and 3 finance heads) which was sent to these three sample groups. In regard to external auditors, this research included only auditing firms that carry out the statutory audit of companies listed in the DSX in the most recent 2 years. It is well noted that the DSX have enforce certain qualification for audit firms that can carry out statutory audit of the listed companies. One major qualification is that, the audit Firm has to be a partnership or joint venture entity, nonetheless a majority of the audit firms in Cameroon are owned by sole proprietors .In Cameroon, there are over 30 registered audit firms but only 6 audit firms are qualified to carry out the external auditing for listed companies in DSX in the last 2 years .this survey involved all the 16 partners of the 6 qualified firms, therefore making a general total sample of 25 that received the questionnaires.

Table 1. The sample Questionnaire survey analysis

Group sample Sample size percentage

AC chairpersons 3 12%

Finance heads 3 12%

Company secretaries 3 12%

External auditors 16 64%

Grand total 25 100%

5.3 Administration of the questionnaire survey

The researcher mailed the questionnaires to the participants on the 12th December 2012 . The Mail package comprised a set of questionnaires, a motivating letter , a free post envelope and the researcher return address. The motivating letter is supportive in gaining higher response rate, this is because the motivating letter clarifies the participants on the purpose and importance of the study. In this motivating letter (see appendix 1), the researcher highlights the nature and importance of the survey, inviting to complete the questionnaire, guaranteeing the confidentiality of the participants responses. To enhance higher response rate by the respondents, the researcher exerted maximum efforts to monitor the survey through e-mails and telephone calls.

5.4 Response of the questionnaire survey

The researcher mailed a total of 25questionaires out of which he received the response of 23 participants. 6 participants were considered disable in the survey. The details of this is given in the table below.

Table 2, response analysis

Description Mail sent Received Response rate unable

AC chairpersons 3 3 100% 0

Finance heads 3 3 100% 0

Company secretaries 3 3 100% 0

External auditors 16 10 62.5% 6

Total 25 19 76% 6

The table shows that an overall response rate of 76% was conceived (19 out of 25).All the AC chairpersons, the finance heads and the company secretaries of the 3 listed companies in DSX (SEMC,SOCAPALM, and SAFACAM) responded to the questionnaires each having a response rate of 100%.However, the External auditor had a response rate of 62.5%( 10 out of 16).6 of the external auditors never responded to the questionnaires due to geographical dispersal and busy work schedules .

SPSS was used in analyzing the data's , the researcher made use of frequencies to assemble raw data to facilitate interpretation, the average was used to rank the scares. However, the researcher did not conduct any statistical analysis since with 19 useable respondents, the subgrouping will be very minute for a significant statistics. Nonetheless, with the fact that 5 of the respondents declared their willingness to further participate in this study and the high questionnaire response rate of 76%; the research findings are still going to be meaningful.

5.5 Interview Survey

The primary aim for the researcher to carry out an interview survey in this research is to permit participants to develop further their opinions because the closed questions of the questionnaire sealed participants into arbitrarily limited alternatives (Foddy, 1999). The researcher made used of semi structured interview method in conducting the interview. This method eases the researcher control over the time, content and the arrangement of the interview. Furthermore, this method permitted the interviewer to pose penetrating questions that gave a deeper understanding of the research issue. Consequently, semi-structured interview was carried out to confirm the outcomes of the questionnaire survey and to get a deeper understanding of the findings.

5.6 Administration of Interview survey

The 5 respondents from the questionnaire survey who indicated their willingness for further participation in this study were the participants for the interview. This group of interviewees were made up of 2 AC chairpersons , 2 external auditors and 1 finance head. The researcher contacted the interviewees firstly through telephone to book for appointment. The interviewees were later e-mailed the interview agenda(see appendix 3) to enable them know beforehand what will be deliberated and also to confirm the appointments(date and time)

The Interviews were conducted on working days through telephone, at the start of each interview, the researcher presented himself, explained the purpose for the study and guaranteed the interviewee the confidentiality of their responses. Each interview lasted for at most 30 minutes. 2 of the participants were interviewed on the same day and the rest of the 3 participants were interviewed on 3 separate days ( all on working days and in the same week).The discussion questions were centered on the participants backgrounds, the attributes of AC (composition, size, qualification, experience),the roles of AC to ensure good corporate governance ,some of the achievements and limitations. The interview ended with words of appreciations from the researcher.

All the 5 respondents who opted for the interview made them self-available and their responses supplemented the questionnaire response to give a deeper understanding of the research issue. The high response rate of the questionnaire survey and the interview will make the research findings and discussion very meaningful.

Chapter 6; Finding and Discussions

6.1 Introduction

This chapter is to discuss the findings of the surveys. The researcher is going to present the findings in 3 main subjects of the survey namely; audit committee operations, relationships and major achievements/challenges. However, it is very necessary to talk about the background of the respondents that participated in this survey. The details are given in the table below.

The above table reveals that, out of a sample of 3 for AC chairpersons, 2 chairperson have obtained a doctorate degree as their highest educational qualification(66.7%) and 1 with master's degree(33.3%).In the sample of finance heads,1 had a bachelor degree,1 master's degree and 1 a doctorate degree giving a 33.31% to each degree. In the part of the company secretaries,2 obtained a bachelor degree(66.7%) and 1 a master's degree(33.3%).Lastly for external auditors, out of 10 who responded to the survey(6 where considered unable),3 holds a master's degree(30%) and 7 a doctorate degree(70%).In total, out of 19 respondents who participated in the survey, 3 are holders of bachelor degree(16%),6 holds master's degree(32%) and 10 doctorate degree holders(52%).All the 4 groups of respondent have qualifications and experience in fields related to accounting, finance, economics, marketing and management

6.2 The Operations of AC

It has been revealed that all the respondents have established audit committee charters, though only 60% of the charters are updated yearly whereas the 40% specified that their charters are been updated as needs arises. This complies with the literature which says that firms should established a tailor made charter, however this is contradictory with the commendation of yearly updates of charters (Hoi et al ,2007: Rezaee et al, 2003).we can base this on the limited human resource capacities in less developed countries (Mensah, 2002).

AC has as their main duty to oversee the company's financial reporting scheme. The AC must have the ultimate right in choosing the external auditors. The table below shows that the relationship with auditors is highly identified. The AC has the vacation to guarantee the independence and qualification of external auditors, however only 47% of the AC are in charge of appointing and dismissing the internal audit manager.1 respondent specified that in their company, the audit managers are employed via recruitment organizations and can be sacked by the management with the consent of the AC.

Table 4.The duties of AC

Answer N° Rate

Appointing external auditors

15 79%

Specifying the fees of external auditors 15 79%

The appointment and dismissal of audit manager 9 47%

None of the above 1 5%

The AC also have the following duties as mentioned in their proxy statements, risk monitoring, to guarantee that there compliances with internal controls as well as guaranteeing that the management is in conformity with the local regulations, implements internal audit recommendations and outline the scope of internal audit.The committee have to monitor both the coverage of internal and external audit in order to make sure that all crucial areas of risks are covered. To do this, the AC must have an encounter with the auditors to evaluate and deliberate on the current year's audit proposal and to resolve previous year issues. This point was largely accepted with 79% of the respondents indicated the presence of such meetings in their companies before the start of each audit.

The issue of independence of external auditors is windswept if they likewise deliver non audit service. Therefore, the AC have to keep an eye on these non-audit services. The researcher's findings shows that only 50% of AC are carrying out the monitoring of non-audit services. It has been argued by mensah (2002) that companies in which the government detained a majority of shares, companies board members serve by virtue of their position as management of shareholders and not due to their qualifications nor experiences mensah (2002).This is the situation in Cameroon where a majority of shares of companies listed in DSX is own by the government.

In order to guarantee the independence of AC members and to evade conflict of interest, the board of directors should appoint AC members and not the management. According to CMA guidelines, all AC should comprise of a least 3 independent non-executive directors. As CMA requirement, all the respondent's audit committees are made up of a least 3 members .Nevertheless, 30% of respondents indicated that their AC have less than 3 independent non-executive directors which is contrary to CMA.

All the respondent indicated that their AC members have sufficient knowledge and expertise to carry out their duties. This justifies the rapid evolution of CG in Cameroon within a short time. In 1991, a study carried in USA revealed that over half of the 40 surveyed AC from US banks did not have a even a single members with expertise in allocated accounting, auditing and banking fields(GAO, 1991)

A good AC should meet 12 times a year before the board meeting(joshi and wakil, 2004). In this study ,no respondent met with this premise ,they all indicated that their AC do holds meetings quarterly. However 65% indicated that the meetings last for two hours and only 35% indicated that their AC meetings last for 4 hours

The AC should report to the board only when need arises. As a condition for an effective AC, there must be an informative reporting to the board(CMA, 2002).The AC have to evaluate their performance yearly. An AC can be doing efficient job but if their findings are not reported to the board, the company is not going be benefit from the AC efficiency. It is very essential to clearly define the relationships and the mode of communication between AC and the board.Also there should be a regular reporting to the board in order for the board members to be alert of any pertinent issue that need to be settled before the presentation of the account for endorsement.

In Cameroon, AC seems to be doing good in this part with 80% reporting to the shareholders. though 30% of the respondents specified that they report through the boards and on a quarterly basis . 52% of the respondents indicated that they do yearly evaluation of AC performance.

6.3 Relationships

This study observed the relationships of AC with management, internal and external auditors focusing on their mode of communications and resolution of differences (disagreements)

An effective AC is only achieved when there is a positive working relationship. In this study, all the participants perceived a cordial relationships .They mentioned that they can communicate through mails ,phone calls, and through e-mails..60% of the respondents mentioned that they communicate as need arises, 32% on a quarterly basis and 8% semi-annually.

AC should be capable of holding meetings with internal and external auditors in the absence of the management. In this study, it is observed that 70% of the participants company's CEOs only appears in AC meetings when invited .However all our participants agreed that their AC are independent of management. This study further found out that there is timely reporting of any disagreement among the company management and auditors to the AC. 53% of the participants mentioned that AC usefully challenges management .the main factor here is the issue where directors are been appointed based on their relationship with the majority shareholders and not based on their qualification nor experiences(Rabelo and Vasconcelos, 2002).In this study, all the participants specified that they always resolute variances of opinion regarding accounting policies to the satisfaction of AC .

It is revealed in this study that the relationships of AC with management and auditors(internal and external ) is relatively high among companies listed in DSX. Communications are open and there is time for the AC and auditors to meet without the management presence.

6.4 Major achievements and Challenges of AC

The AC have the responsibility of the performance and competence of the department of internal audit. All the participants in this study mentioned that there are remarkable improvements in the efficiency and effectiveness in the internal auditing department. Assumed that internal auditing is one of the crucial responsibilities of AC. Thus, this is an evident that AC are meeting up with their objectives in Cameroon

In this study,80% of the respondents acknowledged that AC has improved the reliability of financial reporting. However this is like a shock since Cameroon like other developing countries suffer from the shortage of personnel's with accounting and financial skills(waweru and Uliana, 2005).

Among other achievements of AC are improvement in the practices of CG,management of risk ,the roles of internal auditors are clearly defined regarding policy setting, compelling management to focus more on internal controls, refining the tendering system and bringing down auditing cost by minimizing the time spent by external audit.

As that concerning the challenges, only a few of the participants mentioned that they faces some challenges from the fast altering legal and operating environment joined with the cumulating local and international regulations. Also ,with the fact the concept of AC is newly introduced in Cameroon poses another problem in setting task or duty limits within the company as certain dominant senior managers always interfere in the duties of AC.

Chapter 7.Conclusion and References

7.1 Conclusion

In this study, the researcher examined AC focusing on their operations, relationships with management and auditors (internal and external),the major achievements and challenges of Companies listed in DSX (Cameroon).Astonishingly, a few of this research findings seems to be consistent with those in developed countries, The study results shows that inadequate human resource capacity, sleeping shareholders and the interference of the government has affected AC operation in Cameroon. 40% of the respondents never does the yearly updates of their charter as mandated, thus signifying inadequate human resource capacity in Cameroon like in other developing economies.

The low rate monitoring of the non-audit services delivered by the external auditors as well as management challenges are as a result of the fact that a majority of board directors in Cameroon are been appointed only based on their management position in the government and not based on their qualifications nor experience. As CMA requirement, 30% of the respondent's AC have less than 3 non-executive directors.

The independence of internal and external auditors has been increasd by AC.This study reveals that AC in Cameroon listed companies have made a remarkable improvement in the reliability of financial reporting thus boosting up shareholders confidence .Another remarkable achievements of AC is the efficiency and effectiveness of internal audit.

According to this study, there is a positive relationships between the AC, management and the auditors.Rezaee et al(2003) argued that cordial working relationships guarantees efficient corporate performance

These conclusions are drawn based on the insight of the respondents. The 3 groups of respondents from the 3 listed companies in DSX and the 16 qualified external auditing firms in Cameroon amounted the respondent sample to 25, out of this only 19 responded to the questionnaire survey and 5 further participated in the interview survey( they indicated in the questionnaire).Nevertheless , it is difficult to globalize the result of this study to other countries because of country variations (mangena and Chamisa, 2008).it was also point out by joshi and wakil (2004) that the occurrence, the composition and functions of AC are influence by the level of countries variations